Firms decide how many units to produce Which pair comes from an elastic demand c

Question

Firms decide how many units to produce

Which pair comes from an elastic demand curve?

For most products, the single most important determinant of the price elasticity of demand is

Suppose a political candidate promises more funding for research on new diseases like the Asian bird flu and says that this funding can increase today without cutting any other programs. In order for the candidate to be correct,

Which chain of events is correct? A decrease in demand causes a

Suppose we observe an increase in the equilibrium quantity of plasma televisions and a decrease in the equilibrium price of these televisions. This can be explained

Which chain of events is correct? An increase in supply causes a

Which of the following is false?

Suppose business demand for air travel has an elasticity of 0.8 and leisure demand for air travel has an elasticity of 1.6. Suppose also that currently, both have the same price. Which of the following is correct?

The reason taxes impose a burden on demanders is that taxes

The benefit to producers from selling an additional unit of output is the difference between

If demand is elastic and supply is inelastic, a tax will be mainly incident on which of the following groups?

Consumer surplus is obtained because

Rent controls have resulted in all of the following except

The private equilibrium quantity is ____ the socially optimal quantity in the case of negative consumption externalities. From society's viewpoint it would be efficient for ____ of the product to be consumed.

If firms expect lower prices in the future, this would be shown as

Demand for broadly defined category groups, such as restaurants as a general category,

Deadweight losses result when

Explanation / Answer

by comparing the marginal cost of producing a unit with the price they will receive. A competitive firm produces output at the level where its marginal revenue is same as marginal cost and marginal revenue is equal to price under perfect competition. A one percent increase in price leads to a five percent decrease in quantity demanded. An elastic demand curve is flat and shows high responsiveness which means a slight increase in price leads to a large decrease in quantity demanded. the availability of substitutes for the product. More the number of substitutes available, more responsive is consumer demand and hence more elastic. If the price of good increases, the consumer will immediately switch to substitute and decrease quantity demanded of the good. the economy must currently be producing inside its Production Possibilities Frontier. A PPF is a downward sloping curve showing that if an economy uses its all resources, it can change production by shifting resources from one product to another. But if the economy is inside PPF, it can increase production of a certain good without reducing production of other good.

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